European new car market enjoys calm before storm

FRANKFURT (Reuters) — New car registrations in the European Union rose 10.8 percent in March, that month’s biggest growth in years, helped by one extra working day as well as resurgent demand in the four biggest markets outside of Germany.

According to statistics from industry group ACEA, new registrations soared to 1.64 million vehicles, eclipsing the absolute figure from March 2008.

Despite the strong figures, analysts and executives warn that the clock is ticking on volume carmakers like Volkswagen AG.

While premium brands like BMW AG expect to see a gradual improvement in underlying demand over the coming months, the floor is expected to drop out beneath the feet of mass car brands once a host of government scrapping incentives gradually expire as the year draws on.

The German auto market plummeted 27 percent in March after its generous “cash for clunkers” scheme ended last September.

Although the once bombed-out market of Spain saw a 63 percent rise in volumes flattered by a very low base comparison, domestic carmaker Seat proved unable to benefit as registrations for VW’s Spanish brand increased only some 8 percent.

Renault’s low-cost Dacia enjoyed a 61 percent gain across Europe as demand for its affordable, spartan models like the Sandero hatchback remained unabated.

The Romanian brand even nearly matched Seat’s market share of 2.1 percent in March, although Dacia was effectively only resurrected some six years ago with the debut of the Logan. While Korean carmakers Hyundai and Kia both saw registrations growing by about a quarter last month, Toyota and Lexus saw their combined numbers slip 13.6 percent in March as the after-effects of its quality scandal continued to hurt the group’s performance.

It may be little comfort to Toyota that Honda and Suzuki also suffered a poor month, with figures dropping 16 percent and 19 percent, respectively.

Nissan proved to be the only Japanese carmaker to post a growth in demand with a 42 percent rise.

Both Renault and PSA/Peugeot-Citroen continued to enjoy their domestic advantage after the French car market increased by 18 percent.